On data laws, its banks versus fintech

Data laws are a hot button issue in Australian finance. But perhaps what’s most remarkable about them is that they hardly exist.

“There is a huge gap between any data protection regime and what is actually going on,” says Amy Ciolek, a legal luminary at Ashurst Australia.

“There is a lot of data floating around not currently covered by a protection under the existing regime. Certain social media companies collect and store vast amounts of data and, it is hard to know exactly what they’re doing with it. Theoretically you can say it is a consumer’s choice whether to use social media or not. But whether that’s informed use is a good question.”

The politics of data governance reared its head again last month when the Productivity Commission, a heavyweight government advisory body, said that market forces should drive data sharing.

The Commission’s views cut against efforts by Australian fintech to mandate that powerful financial institutions, such as the major banks, share their customers’ data. 

Despite appearances, Ciolek rejects the interpretation that the Commission sided with the banks against fintech.

“I’m not sure this report sides with the banks. It seems to take the approach in a number of places that the net benefit of the data sharing needs to be considered, rather than the individual consumer’s needs or bank’s needs or fintech’s needs.

The final copy of the report is due March 2017. But the draft, the deadline for comment on which fell 12 December, has come under fierce criticism by fintechs. Writing in The Australian, George Lucas, managing director of Acorns Australia said:

“Disappointingly, [it] pushes the agenda of the banks. Its recommendation is that people should have the right to read, edit and share their own data held by the banks. But the banks will still control how, when and who it is shared with.

“The push to share data… which has been embraced by other governments worldwide, is seen to have little value by the Productivity Commission in Australia.”

Research presented at the World Economic Forum showed that 90 per cent of data used today was created the past two years, suggesting that whatever the final assessment of the Commission, it is likely that the issue’s significance, and the tensions surrounding it, will only rise.